diff --git a/README.md b/README.md
index 9bb5526..152baa3 100644
--- a/README.md
+++ b/README.md
@@ -27,6 +27,8 @@ This monorepo contains:
 ### Demo Options
 - `--verbose, -v` - Show detailed logs
 - `--refresh` - Force refresh demo from GitHub
+- `--port, -p` - Specify port number (default: 8016)
+- `--dir, -d` - Specify demo directory (default: ~/.cache/atxp/demo)
 
 ## Examples
 
@@ -44,6 +46,15 @@ npx atxp demo
 # Run with detailed output  
 npx atxp demo --verbose
 
+# Use custom port
+npx atxp demo --port 3000
+
+# Use custom directory
+npx atxp demo --dir ./my-demo
+
+# Combine options
+npx atxp demo --port 3000 --dir ./my-demo --verbose
+
 # Force refresh from GitHub
 npx atxp demo --refresh
 ```
diff --git a/packages/atxp/README.md b/packages/atxp/README.md
index 2bc42d6..ca2ef98 100644
--- a/packages/atxp/README.md
+++ b/packages/atxp/README.md
@@ -36,11 +36,16 @@ Runs the interactive ATXP demo application.
 **Options:**
 - `--verbose, -v` - Show detailed logs
 - `--refresh` - Force refresh demo from GitHub
+- `--port, -p` - Specify port number (default: 8016)
+- `--dir, -d` - Specify demo directory (default: ~/.cache/atxp/demo)
 
 **Examples:**
 ```bash
 npx atxp demo
 npx atxp demo --verbose
+npx atxp demo --port 3000
+npx atxp demo --dir ./my-demo
+npx atxp demo --port 3000 --dir ./my-demo --verbose
 npx atxp demo --refresh
 ```
 
diff --git a/packages/atxp/src/help.ts b/packages/atxp/src/help.ts
index 3e99043..4e3a27c 100644
--- a/packages/atxp/src/help.ts
+++ b/packages/atxp/src/help.ts
@@ -18,12 +18,17 @@ export function showHelp(): void {
   console.log(chalk.bold('Demo Options:'));
   console.log('  ' + chalk.yellow('--verbose, -v') + '  ' + 'Show detailed logs');
   console.log('  ' + chalk.yellow('--refresh') + '      ' + 'Force refresh the demo from GitHub');
+  console.log('  ' + chalk.yellow('--port, -p') + '    ' + 'Specify port number (default: 8016)');
+  console.log('  ' + chalk.yellow('--dir, -d') + '     ' + 'Specify demo directory (default: ~/.cache/atxp/demo)');
   console.log();
   
   console.log(chalk.bold('Examples:'));
-  console.log('  npx atxp demo              # Run the demo');
-  console.log('  npx atxp demo --verbose    # Run demo with detailed logs');
-  console.log('  npx atxp create            # Create a new project');
+  console.log('  npx atxp demo                          # Run the demo with defaults');
+  console.log('  npx atxp demo --verbose                # Run demo with detailed logs');
+  console.log('  npx atxp demo --port 3000              # Run demo on port 3000');
+  console.log('  npx atxp demo --dir ./my-demo          # Use custom demo directory');
+  console.log('  npx atxp demo --port 3000 --dir ./demo # Custom port and directory');
+  console.log('  npx atxp create                        # Create a new project');
   console.log();
   
   console.log(chalk.bold('Learn more:'));
diff --git a/packages/atxp/src/index.ts b/packages/atxp/src/index.ts
index 8a57a1b..7be22ad 100644
--- a/packages/atxp/src/index.ts
+++ b/packages/atxp/src/index.ts
@@ -1,11 +1,52 @@
 #!/usr/bin/env node
 
+import path from 'path';
+import os from 'os';
 import { createProject } from './create-project.js';
 import { runDemo } from './run-demo.js';
 import { showHelp } from './help.js';
 
-// Get the command from arguments
-const command = process.argv[2];
+interface DemoOptions {
+  port: number;
+  dir: string;
+  verbose: boolean;
+  refresh: boolean;
+}
+
+// Parse command line arguments
+function parseArgs(): { command: string; demoOptions: DemoOptions } {
+  const command = process.argv[2];
+  
+  // Parse demo options
+  const getArgValue = (flag: string, shortFlag: string): string | undefined => {
+    const index = process.argv.findIndex(arg => arg === flag || arg === shortFlag);
+    return index !== -1 ? process.argv[index + 1] : undefined;
+  };
+  
+  const port = (() => {
+    const portValue = getArgValue('--port', '-p');
+    if (portValue) {
+      const parsed = parseInt(portValue, 10);
+      if (parsed > 0 && parsed < 65536) return parsed;
+    }
+    return 8016; // default port
+  })();
+  
+  const dir = (() => {
+    const dirValue = getArgValue('--dir', '-d');
+    return dirValue ? path.resolve(dirValue) : path.join(os.homedir(), '.cache', 'atxp', 'demo');
+  })();
+  
+  const verbose = process.argv.includes('--verbose') || process.argv.includes('-v');
+  const refresh = process.argv.includes('--refresh');
+  
+  return {
+    command,
+    demoOptions: { port, dir, verbose, refresh }
+  };
+}
+
+const { command, demoOptions } = parseArgs();
 
 // Detect if we're in create mode (npm create atxp or npx atxp create)
 const isCreateMode = process.env.npm_config_argv?.includes('create') || 
@@ -18,7 +59,7 @@ if (isCreateMode) {
   createProject();
 } else if (command === 'demo') {
   console.log('Starting ATXP demo...');
-  runDemo();
+  runDemo(demoOptions);
 } else if (command === 'help' || command === '--help' || command === '-h') {
   showHelp();
 } else if (!command) {
diff --git a/packages/atxp/src/run-demo.ts b/packages/atxp/src/run-demo.ts
index de0fb8c..dcd726f 100644
--- a/packages/atxp/src/run-demo.ts
+++ b/packages/atxp/src/run-demo.ts
@@ -3,37 +3,38 @@ import { spawn } from 'child_process';
 import fs from 'fs-extra';
 import path from 'path';
 import open from 'open';
-import os from 'os';
 
-const DEMO_REPO_URL = 'https://github.com/atxp-dev/agent-demo.git';
-const DEMO_DIR = path.join(os.homedir(), '.cache', 'atxp', 'demo');
-const DEMO_PORT = 8016;
+interface DemoOptions {
+  port: number;
+  dir: string;
+  verbose: boolean;
+  refresh: boolean;
+}
 
-const isVerbose = process.argv.includes('--verbose') || process.argv.includes('-v');
-const shouldRefresh = process.argv.includes('--refresh');
+const DEMO_REPO_URL = 'https://github.com/atxp-dev/agent-demo.git';
 
-export async function runDemo(): Promise<void> {
+export async function runDemo(options: DemoOptions): Promise<void> {
   try {
     // Check if demo directory exists, if not clone it
-    if (!await fs.pathExists(DEMO_DIR)) {
+    if (!await fs.pathExists(options.dir)) {
       console.log(chalk.blue('Downloading demo from GitHub...'));
-      await cloneDemoRepo();
-    } else if (shouldRefresh) {
+      await cloneDemoRepo(options.dir, options.verbose);
+    } else if (options.refresh) {
       // Force refresh if --refresh flag is used
       console.log(chalk.blue('Forcing demo refresh...'));
-      await fs.remove(DEMO_DIR);
-      await cloneDemoRepo();
+      await fs.remove(options.dir);
+      await cloneDemoRepo(options.dir, options.verbose);
     } else {
       console.log(chalk.blue('Using existing demo...'));
       // Pull latest changes
-      await updateDemoRepo();
+      await updateDemoRepo(options.dir, options.verbose);
     }
 
     // Install dependencies if needed
-    await installDependencies();
+    await installDependencies(options.dir, options.verbose);
 
     // Start the demo and open browser
-    await startDemo();
+    await startDemo(options.port, options.dir, options.verbose);
 
   } catch (error) {
     console.error(chalk.red('Error starting demo:'), (error as Error).message);
@@ -41,9 +42,9 @@ export async function runDemo(): Promise<void> {
   }
 }
 
-async function cloneDemoRepo(): Promise<void> {
+async function cloneDemoRepo(demoDir: string, isVerbose: boolean): Promise<void> {
   return new Promise((resolve, reject) => {
-    const git = spawn('git', ['clone', DEMO_REPO_URL, DEMO_DIR], {
+    const git = spawn('git', ['clone', DEMO_REPO_URL, demoDir], {
       stdio: isVerbose ? 'inherit' : 'pipe'
     });
 
@@ -62,10 +63,10 @@ async function cloneDemoRepo(): Promise<void> {
   });
 }
 
-async function updateDemoRepo(): Promise<void> {
+async function updateDemoRepo(demoDir: string, isVerbose: boolean): Promise<void> {
   return new Promise((resolve, _reject) => {
     const git = spawn('git', ['pull'], {
-      cwd: DEMO_DIR,
+      cwd: demoDir,
       stdio: isVerbose ? 'inherit' : 'pipe'
     });
 
@@ -86,7 +87,7 @@ async function updateDemoRepo(): Promise<void> {
   });
 }
 
-async function installDependencies(): Promise<void> {
+async function installDependencies(demoDir: string, isVerbose: boolean): Promise<void> {
   console.log(chalk.blue('Installing dependencies...'));
   
   return new Promise((resolve, reject) => {
@@ -94,7 +95,7 @@ async function installDependencies(): Promise<void> {
     const npmArgs = isVerbose ? ['run', 'install-all'] : ['run', 'install-all', '--silent'];
     
     const npm = spawn('npm', npmArgs, {
-      cwd: DEMO_DIR,
+      cwd: demoDir,
       stdio: isVerbose ? 'inherit' : 'pipe'
     });
 
@@ -113,9 +114,10 @@ async function installDependencies(): Promise<void> {
   });
 }
 
-async function startDemo(): Promise<void> {
+async function startDemo(port: number, demoDir: string, isVerbose: boolean): Promise<void> {
   console.log(chalk.blue('Starting demo application...'));
-  console.log(chalk.green(`Demo will be available at: http://localhost:${DEMO_PORT}`));
+  console.log(chalk.green(`Demo will be available at: http://localhost:${port}`));
+  console.log(chalk.gray(`Demo directory: ${demoDir}`));
   console.log(chalk.yellow('Press Ctrl+C to stop the demo'));
   if (!isVerbose) {
     console.log(chalk.gray('Run with --verbose to see detailed logs'));
@@ -125,7 +127,7 @@ async function startDemo(): Promise<void> {
     // Set the port environment variable for the demo
     const env = { 
       ...process.env, 
-      PORT: DEMO_PORT.toString(),
+      PORT: port.toString(),
       // Suppress deprecation warnings
       NODE_NO_WARNINGS: '1',
       // Suppress React warnings in development
@@ -133,7 +135,7 @@ async function startDemo(): Promise<void> {
     };
     
     const demo = spawn('npm', ['run', 'dev'], {
-      cwd: DEMO_DIR,
+      cwd: demoDir,
       stdio: 'pipe', // Always use pipe to capture output
       env
     });
@@ -178,10 +180,10 @@ async function startDemo(): Promise<void> {
       if (!demoOpenedBrowser) {
         try {
           console.log(chalk.blue('Opening browser...'));
-          await open(`http://localhost:${DEMO_PORT}`);
+          await open(`http://localhost:${port}`);
         } catch {
           console.log(chalk.yellow('Could not open browser automatically'));
-          console.log(chalk.white(`Please open http://localhost:${DEMO_PORT} in your browser`));
+          console.log(chalk.white(`Please open http://localhost:${port} in your browser`));
         }
       }
     }, 2000);